Sunday, November 30, 2008

Today's lesson

One of my students sent me a column to look over. The writer is a very bright young guy who spent some time on Hillary Clinton's campaign last year. He put most of the blame on the opposition for the political and constitutional crisis brewing in Ottawa. I wrote him a long note in reply, and, since I like to recycle everything I write, I've decided to blog it:

This thing isn't over yet. Looks like the opposition parties are close to a coalition and they're not going to stop.

Here are a few things to consider:

Why did Harper cut party financing without restoring the ability of parties to take large donations from corporations (affecting the Libs) and unions (Bloc and NDP)? Harper knew the Libs borrowed the money from the banks to pay for the last election campaign on the basis that the subsidy money was coming. The change would not only ruin their fundraising, it would destroy their credit.

Why did he take away the public sector right to strike for the next three years just a week after the largest union had made a 4-year deal?

I see this as deliberate provocation of a snap election that the Tories would likely win. Harper believed the Liberals couldn't go into a coalition with Dion as leader, so the only option would be an election. Turns out Chretien and Broadbent have worked something out. As for the Bloc, it's done the biggest climb-down. Supposedly, all it wants is money for the Quebec forestry and manufacturing sector, and no cabinet positions.

There is a story in the Toronto Star today saying Harper, Layton and Duceppe wrote to the GG in the fall of 2004 asking her to consider the same type of coalition when the Martin government was teetering. As well, consider the situation in Ontario in 1985, when the Tories won more seats, met the House and were quickly defeated, with the Liberals and NDP pledging to co-operate. Now, there are important differences between Ontario 1985 and Ottawa 2008. Frank Miller, the Tory leader, did not ask for an election. His party had been freefalling at the end of the campaign and he would have lost if they had gone back to the people. Miller went to the Lieut. Gov. and suggested he invite David Peterson to form a government.

In King-Byng (1925), the GG would not give King a dissolution because the government had not yet been defeated (on a censure motion regarding a corruption scandal, not a confidence motion) just a few months after an election. King spun it into a case of interference by the British-appointed GG, even though it was a completely rational decision by Byng that any GG would likely make now. Don't fall into the same trap on King-Byng that 99% of commentators do.

I expect Harper to do the same thing: run against a power-hungry opposition and the the GG (along with Harper's Culture War opponents -- Eastern Liberals, the press, academia and the rest). Having a black woman leftist CBC Governor-General to bash will come in very handy for Harper.


Cheers


Mark

Friday, November 28, 2008

CanWest: Stick a Fork in It (Part 803)

The Dominion Bond Rating Service (DBRS) has downgraded CanWest's credit from "speculative" to "highly speculative" and believes the company will be "in a negative cash flow" situation next year.
The DBRS says the problem is aggravated by a slowdown in advertising.

I'll add another factor: it's managed and staffed by some of the worst news managers in the business. Most of the managerial talent is long gone. There are a few very bright people left, but they're nowhere near the steering wheel.

Keep this in mind: CanWest still employs David Warren. 'Nough said.

Thursday, November 27, 2008

Roll me another one

Archaeologists have found the world's oldest pot stash, more than a pound and a half of weed left in an ancient Chinese tomb.

Today's moment of honesty

When I go to the National Hurricane Center web page, I'm disappointed when there aren't any.

I truly believe most dogs are better than most cats.

I would only watch a car race if I had a reasonably good chance of seeing a wreck.

I would buy a cell phone jammer if I had the chance and I would use it everywhere.

I used to feel superior when I went to the States, but i don't anymore.

I still fall for politicians'lies.

I have ruined some very good books by reading them in the bathtub.

I know in my heart that if I was about to be crushed by a meteorite, I'd repent my sins to God.

Wednesday, November 26, 2008

Bill Harper

A decent guy to work for with a hell of a great sense of humour. A lot of people will miss this guy.

Tuesday, November 25, 2008

Friday, November 21, 2008

Tuesday, November 18, 2008

CanWest Decomposition Watch

67 cents

How low can it go?
I can say with some expertise that it can't fall another 68 cents.

There was a huge number of Canwest shares traded today, about 1.1 million. That's more the ten times the average number.

Monday, November 17, 2008

Newsprint

The makers of newsprint attempt to break the law of supply and demand. There was a time when smart publishers had their own mills. Brian Mulroney's father worked in one owned by the Chicago Tribune. But then came leveraged buy-outs, and the new owners sold the plants. Many of them bought TV network affiliates or businesses that had no relation to newspapers. Smart move.
Meanwhile, there are four dormant pulp mills on the North Shore of Lake Superior: at Marathon, Terrace Bay, Red Rock and Thunder Bay. And one in Dryden.
Noe there's an industry that needs a bit of government-inspired head shaking.

Friday, November 14, 2008

Today in roadkill

Today's close: A record intra-day low of 66 cents, a record low close of 73 cents.
How low will it go? I have no idea. Like Nortel, it may go to zero. All this stopped making sense months ago. My gut tells me it's a good time to buy this stock and hope that shareholder equity isn't wiped out, but do it only if you have money to lose. If shareholders maintain some grip on this company's assets, they should be worth something in a few years and under new management. But if the compoany does go bankrupt, the shareholders will be screwed. It might be worthwhile to see if insiders are selling off, something they're within their legal right to do. The only thing that's stopped me from buying some of this stock is my concern about a conflict of interest, since there are quite a few people who follow this story by coming here.


Globe and Mail media reporter Grant Robertson wrote a large feature on CanWest for today's Report on Business that talked about everything but the quality issue, which is actually the company's biggest problem. Here's the piece, which addresses CanWest's big debt problems and mentions the buy-up of stock by Fairfax.
CanWest's inability to create good content does almost surface in the discussion of the Australian TV network owned by CanWest, which is third in the ratings in a rather small market.
Mediocrity is killing CanWest. You simply cannot gut newspapers and expect people to buy them. You can't show NCIS, a tedious fiction drama, on the History Channel three times every day and expect people to watch. CanWest under-rates the public, failing to realize that the Ottawa Citizen is not a good enough paper to sell in a national capital and the National Post is not good enough to compete with The Globe and Mail. There are no newspaper monopolies anymore, even in single newspaper towns. CanWest needs to learn that lesson.
And Global TV can barely compete with CTV. They're both so bad, but they each buy enough American hits to survive. That will change as more specialty cable stations pick up material from HBO and Comedy Central, which are leaving the US networks in the dust.
I doubt the future holds any happy surprises for CanWest.



CanWest lost $1.02 billion in the last quarter, more than $5 per share. Much of this was a paper loss, a one-time charge to reflect the deterioration of the value of its assets. The actual, cash loss was about $10 million.
CBC's take on it is here.
Interesting that they would take such a huge charge at one time. The charge -- about 15% of the value of the company -- combined with the effects of a very unimaginative and rather lame cost-cutting drive that is certain to reduce revenue and value in the company, might push the stock down ever further.
CanWest is a heavily-leveraged company that could suffer severely in a recession. The next two quarterly reports, covering the fall of '08, (when the markets and public clued in to the '07 subprime collapse), and the recession Christmas that's coming, will be very important.

INJURY TO INSULT:

Arthur Kent is adding to his Alberta lawsuit against CanWest and columnist Don Martin by filing a new action in New York.

Meanwhile, TorStar hit a 52-week and a new modern low, dropping 9% today to close just over $9. The stock traded over $30 two years ago.

Wednesday, November 12, 2008

CanWest decomposition watch

CanWest will cut 5% of its work force, mostly out of its print division.

CP re-writes the press release, neglecting to mention the cuts to newspapers:


UPDATE (Thursday morning): Bay Street's reaction to the cuts? The stock hit another all-time low this morning, 82 cents at 11 a.m. Then 75 cents at 3 p.m. before taking a dead-cat bounce to 80 cents.
I guess the Street is no more impressed by gutted papers and crappy TV than I am.


What does it mean? CanWest is reducing the physical size of some papers and is going to concentrate even more on centralizing its news and bumpf writing and will send out even more canned material to fill its papers. It makes the situation at the Montreal Gazette very interesting. There, a strike looms over CanWest’s plan to move pagination (page layout) of the paper from Montreal to a non-unionized facility in the lovely city of Hamilton.

There are also unspecified cuts coming at the National Post. The Aspers, as we already knew, are pulling the paper out of Manitoba and Saskatchewan. They also plan to end cheap subscription deals like mine. I get the Post for $6 a month.

Meanwhile, the stock hit another historic low today: 84 cents -- about 10% of what is was in the summer of 2007. This comes in the wake of Fairfax Holding’s recent announcement that it was increasing its stake in CanWest. Fairfax has been buying all the way down and will hold about a quarter of the company’s stock, making Fairfax guru Prem Watsa a sort of fourth Asper child. The company is now running more than two weeks late with its reporting of the last quarter’s financials, and it’s pretty clear Bay Street – those few brokers and analysts, other than Fairfax, that actually care anymore – don’t think they’ll be pretty.

Sorry that my own work has lately kept me too busy to stay on top of recent developments. I'll look over this week's financials as carefully as I can.

Saturday, November 08, 2008

California Dreamin'

Anyone actually notice California voters stripped rights from gays (Prop. 8) and lesbians and gave them to farm animals (Prop. 2)?

Thursday, November 06, 2008

Stoopid Gurrrrl

This has happened to me, too, and I don't even smoke.

Livin' the stereotype

The meltdown of Bear Stearns Cos. in March marked the collapse of the modern securities industry, and the careers of some on Wall Street.

The financial crisis also claimed the life of a veteran Bear Stearns manager.

Barry Fox, a research supervisor who worked for nine years at the brokerage firm, took a drug overdose and then jumped from his 29th-floor apartment the evening in May after he learned he wouldn't be hired by J.P. Morgan Chase & Co., which was about to buy his firm. A coroner recently confirmed in an autopsy report that the death was a suicide.

Wednesday, November 05, 2008

I'm alright now, Jack

Black and Hispanic voters in California provided the extra ooomph for Proposition 8, a ban on gay marriage, to pass by a fairly slim margin. Without the big pro-Obama turnout among Black and Hispanic voters, who voted heavily against gay marriage rights, the proposition would have lost.
Like Jon Stewart, I was amazed the proposition was put forward by Mormons, a group of people who have had a rather interesting take on one man-one woman marriage.

How Others See Canada's Newspaper Biz

ANALYSIS-Canada's newspaper industry shows signs of strain
Wed, Nov 5 2008, 18:46 GMT
http://www.afxnews.com



By Wojtek Dabrowski
Reuters


TORONTO, Nov 5 (Reuters) - Even though U.S.-style waves of layoffs and major restructurings have not washed over Canada's newspaper industry, signs of a significant downturn are starting to show.


Analysts say that as corporations pull back spending on television and newspaper advertising, already flat revenues are likely to begin declining, especially at newspapers in the competitive market of Toronto, Canada' biggest city.


Companies such as Torstar Corp and Canwest Global Communications are among those that stand to be hurt the most because of their broad exposure to the flagging newspaper market.


In the United States, publishers from Gannett Co Inc and McClatchy Co to the New York Times Co. and Washington Post Co have cut thousands of jobs as they struggle with a sharp drop in advertising revenue as readers drop print editions and get their news online.


Bob Bek, an analyst at CIBC World Markets, said that although the economic pressures facing Canadian newspaper companies aren't as intense as those in the United States, there are still significant problems -- ranging from falling ad revenues to rising newsprint costs and pension expenses.


"By no means is it a positive outlook," Bek said.


Canadian newspapers have also lagged their counterparts elsewhere in the world in finding new ways to charging for content -- such as fees for premium online content -- said Alan Middleton, a professor of marketing at the Schulich School of Business at Toronto's York University.


"If they haven't commercialized the content elsewhere to make it a necessity, their bottom lines are going to be hit very hard," Middleton said, citing falling retail, automotive and government ad spending.


Torstar, which publishes the Toronto Star, the biggest newspaper in Canada, said last week its results should see benefits from unspecified "restructuring efforts already undertaken." It said in the first nine months of the year, its stable of urban and regional newspapers around Toronto cut 270 jobs.


Despite the cost-cutting efforts, Torstar Chief Executive Robert Prichard said the economic outlook remains gloomy as the Star's ad revenue fell 8.5 percent in the quarter and newsprint prices jumped 18 percent.


Meanwhile, Canwest -- Canada's biggest publisher of daily newspapers -- has significantly cut the print presence of its flagship National Post daily in the Western Canadian provinces of Manitoba and Saskatchewan. A company spokesman cited printing and distribution costs as reasons behind the move.


"It's been kept alive artificially," Bek said of the Post, adding that Canwest obviously still sees a franchise value in the daily. The company reports results on Nov. 14.


Asked whether he thinks some newspapers could be forced to close up shop as a result of the downturn, Bek said: "Other than the Post ... I don't think anything else is at risk."


Quebecor Inc is another major newspaper owner, and publisher of the Sun Media chain of tabloid dailies. The company could provide details on its newspaper operations when it reports results on Nov. 7.


The least visibility is provided by the privately held Globe and Mail, which is owned by CTVglobemedia Inc and does not publish financial results.


A turnaround in the advertising market and a cooling of the increases in newsprint prices would likely be necessary before the newspaper industry sees any sort of stability. But signs of a bounce-back are still a long way away, Bek said.


"It's too early to look for a recovery here."


($1=$1.16 Canadian)


(Reporting by Wojtek Dabrowski; editing by Richard Valdmanis) Keywords: CANADA NEWSPAPERS/


(wojtek.dabrowski@reuters.com

Always remember the Fifth of November

What's to say? Americans will have a smarter, wiser president in about seventy days. It will also have a government teetering on bankruptcy and caught in not one but two land wars in Asia.
It seems American democracy, for all its flaws, pushes forward great leaders in tough times: Lincoln in 1860, Roosevelt in 1932, and, I suspect, Barack Obama in 2008. I have rarely seen such a skilled politician and a man who is so comfortable in his skin.
But these may be quite ugly times, too. Nothing changed economically last night. Expectations are high: for medicare, poverty relief, education and so many other services that Americans may not be willing to pay for.
America needs to rebuild its job base. It needs to live up to its trade agreements and its treaties, and stop acting with arrogance. It could start by dealing fairly with Canada's softwood lumber issue.
Obama has every right to go after American companies that have exported jobs while expecting to freely sell their offshore-made goods to Americans. Tariffs are a bad idea, but taxes and fair-trade laws could be used to hobble this practice.
This is a good time to try to re-think everything from the way we make cars to the tax-free status of churches. The very first thing America needs to do is become self-sufficient -- or North America sufficient -- in energy to strip the gears of the OPEC countries, so many of whom have done so much harm to American interests.
I expect Obmama will gently ease the US out of Iraq but will stay in Afghanistan until bin Laden is dead. That is the real exit time. Once he's dead, a decent power-sharing situation can be developed in Afghanistan under the threat of complete destruction if the Afghans allow terrorist camps.
The Iranians will likely try to push Obama, but China and Russia, if they have any sense, will not want the Iranians to have the bomb. The last thing Russia needs is a nuclear-armed Iran shepherding the Muslim former Soviet republics.
In the end, Obama will succeed if he can remake America from a speculation economy to a productive one in which every American feels a sense of ownership and belonging. But it won't be pretty. The Fox News types are going to pull out everything they can. But I suspect Obama won't be nailing any interns in the Oval Office, so things may work out OK.

Saturday, November 01, 2008